‘Totally unacceptable’, was the harsh response of Neelie Kroes, the European Competition Commissioner, rebuffing US criticism of the European Court of First Instance judgment backing the antitrust ruling against Microsoft. ‘The European Commission does not pass judgment on rulings by US courts, and we expect the same degree of respect’, Ms Kroes let know Thomas Barnett, head of the US antitrust division at the Department of Justice in Washington DC.
The problem for a European Commission member is often that few remember the faces, still less be able to spell or pronounce the names, of the twenty-seven men and women leading the EU’s executive body. A recent straw poll in Brussels has assessed their performance near the halfway mark of their term of office under Commission President Jose Manuel Barroso. It was called the Good, the Bad and the Idle. One highly thought-of Commissioner, however, turned out to be Neelie Kroes, in charge of the EU Competition Policy. Her job is the second most important in the European Commission after Barroso’s.
Neelie Kroes, a graduate in transport economics, comes from Rotterdam, the biggest port in the world. ‘That is an important clue to her character. She is a doer and often blunt and direct’, explained a fellow countryman. ‘She was the daughter of a wealthy transport entrepreneur, also a no-nonsense type who insisted Neelie should learn at a young age to drive heavy vehicles and she claims she still can’.
‘She’s pitiless’, an admiring member of her staff said, ‘very determined, never impressed nor intimidated by even the mightiest industrial leader’. The career of the 66-year old Dutch Commissioner has embraced university teaching, ministerial posts and executive jobs. Because of these previous executive responsibilities, it was agreed at the start of her tenure that if any case came up which might suggest a conflict of interest, it should be taken over by Commissioner Charlie McCreevy. He has done this on six occasions so far.
Nowadays Ms Kroes has the reputation of being the most powerful woman in European business. An American poll ranks her as Number 38 on a list of the world’s hundred strongest women. The Competition Commissioner knows the game. At various times she has been on the boards of companies in fields as diverse as shipping, car manufacturing, a pension fund and the Dutch McDonalds. At other periods, as a three times Minister of Transport, she was involved in different stages of the privatisation of Dutch railways and Dutch post and telecommunications.
The competition job is based in the Union’s treaties and therefore pretty safe from political whim or fashion. The Commission has levied fines of two billion euros on erring companies so far this year. In 2006 the Kroes team hit up miscreants for what was then a record of Euro 1.8 billion. A group of four continental brewers must rather regret their price-fixing arrangement which recently landed on the Commissioner’s desk and provoked an Euro 273 million fine, of which, ironically, the Rotterdam beer maker Heineken was obliged to pay Euro 219 million.
Studies show that in some cases cartel arrangements can boost prices by up to 50% and this is something Kroes takes very much to heart. After all, she says of her job ‘This is ultimately about the consumer.’
She rescued Ireland’s national airline Airlingus from a Ryanair’s proposed takeover and set out the reasons for prohibiting the merger with chilling clarity. ‘Such a deal would have created a monopoly or dominant position on thirty-five routes operated by both airlines’, she said. ‘This would have reduced choice and, most likely, led to higher prices for more than 14 million EU passengers using these routes to and from Ireland each year. Our decision to prohibit was essential to safeguard Irish consumers, who depend heavily on air transport, and the other consumers’.
Michael O’Leary, CEO of the successful low budget airline Ryanair, was not amused. But he is in good company. Earlier in her career, when provost of a leading business school, Nyenrode University, Ms. Kroes presented Microsoft boss Bill Gates with an honorary doctorate in 1996. With such a happy recollection, he must have thought there was little to fear when his friend Neelie was given the EU’s competition portfolio in 2004. But Microsoft has been repeatedly fined by the Commission since 2004.
Vindicated on 17 September by an unexpectedly clear endorsement of a 2004 decision to fine Microsoft a record Euro 497,2 million by the Court of First instance, Ms Kroes stated: ‘The Court has upheld a landmark Commission decision to give consumers more choice in software markets. That decision set an important precedent in terms of the obligations of dominant companies to allow competition, in particular in high tech industries’.
Who’s next? The EU Competition Commissioner said, that ‘the ruling would be studied closely for relevance to other possible cases, including an EU antitrust investigation into Intel, the chipmaker.’ Let’s wait and see!
